New Intellectual Property Pilot in the Federal Circuit Court

On 14 June 2017, the Federal Circuit Court issued a memorandum to all intellectual property stakeholders announcing a new pilot program and practice direction for its Melbourne Registry to streamline the management of intellectual property matters.

Much of what is found in the new practice direction implements recommendations made by the Productivity Commission Report on Intellectual Property Arrangements (PC Report), completed in September 2016 (as we previously reported here). The changes came into effect on 30 June 2017 and a link to the practice direction can be found here.

Establishment of a new Intellectual Property List

Currently, very few IP cases are initiated in the Federal Circuit Court. As noted in the PC Report, one of the key concerns of practitioners was the lack of judges with IP expertise and the increased chance that a decision could be reversed on appeal. The new practice direction combats this concern by appointing three panel members to an Intellectual Property List, who will develop specialist IP expertise: Judges Riley, Wilson and McNab.

The establishment of this list is in keeping with the use of specialist IP panels in the Federal Court, and will encourage consistency and predictability in outcomes. Types of matters that fall within the jurisdiction of the Intellectual Property List include:

Trade marks – appeals from decisions of the Registrar of Trade Marks; infringement and revocation actions; cancellation, removal for non-use, and rectification actions; applications for variation of rules governing use of certification marks; determinations of trade mark use; and, determinations of whether a trade mark has become generic.

Designs – appeals from decisions of the Registrar of Designs; infringement, revocation and rectification actions; applications for compulsory licences and relief from unjustified threats; and, a number of applications relating to the Crown use provisions.

Plant Breeders Rights – all matters relating to alleged infringements under the Act.

Consumer Law – claims relating to misuse of market power or industry codes; and, application of the Australian Consumer Law.

Although the PC Report recommended that the Federal Circuit Court’s jurisdiction be expanded to include patent matters, this has not been effected (possibly due to a concern that patent cases are “too complex” for streamlined procedures). This question may be revisited in the future, once the Judges on the list have had time to develop specialised experience in IP matters more generally.

Conduct of Intellectual Property Matters

The new practice direction sets out how the Court will use its existing powers to manage IP cases efficiently, and in a manner that is proportionate to the issues in dispute. Cases are expected to be heard within 8 months of filing, and Judges assigned to a matter will play an active role in ensuring this goal is achieved.

At a first case management conference, the Court will discuss all of the factual and legal issues likely to require determination and any procedural issues that may arise. The purpose of the conference is to formulate ways to bring the matter to trial in a manner proportionate to the financial position of the parties, the degree of complexity of the case, the importance of the case and the amount of money or issues in dispute. Additionally, in keeping with existing Federal Circuit Court Rules, discovery will not be allowable by way of right. Rather, it will only be allowed where the judge declares that it is appropriate in the circumstances of the case.

The Court will also strictly-control the conduct of the trial itself to ensure that there is an efficient use of time and resources. This includes:

Prior to trial, making directions that the parties file a chronology of events, an outline of the case (limited to three pages), contentions of fact and law, and a form of proposed orders.

Limiting matters to a maximum two day hearing (mirroring the UK’s Intellectual Property Enterprise Court).

Where appropriate, allowing telephone attendances.

Expecting parties to reduce opening and final addresses to written form.

Cross-examination being controlled.

Expecting parties to confer, and resolve, evidentiary objections prior to the hearing.

In some circumstances, the Judge may conduct the trial entirely on the papers.

Each of these measures reinforces the Federal Circuit Court’s goal of operating informally and in a streamlined manner to avoid undue expense, particularly in low-value matters.

Federal Circuit Court Costs

One of the key recommendations of the PC Report was that mandatory caps should apply to costs and damages awarded in Federal Circuit Court proceedings, with the goal of establishing the maximum liability any litigant may face when filing an action.

The new practice direction maintains existing Federal Circuit Court powers to grant injunctive relief and damages of up to $750,000. The Court also has the power to specify, at the start of a case, the maximum costs that may be recovered on a party/party basis. According to the direction, “it is anticipated that this provision will be used by the Court in many matters dealt with in this list”.

It is worth noting also that the Federal Circuit Court has an “events-based” cost regime (set out in Schedule 1 of the Federal Circuit Court Rules 2001). In general, costs will be awarded on the basis of a lump sum for particular stages of a proceeding. For example, the lump sum for “Stage-5” preparation of a 2-day matter (the proposed maximum length of an IP matter) is $9756.00 plus the daily hearing fee ($1081.00 for a half-day and $2162.00 for a full day). This significantly limits the likely costs that will be awarded, particularly in comparison to a Federal Court action.

Although this power remains discretionary, its consistent use in IP cases should provide a degree of certainty to rights holders in deciding whether to pursue a Federal Circuit Court action – although we will have to wait and see.